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Pacific Rim Subsidiary Files Claims Against El Salvador


Canadian mining firm Pacific Rim Mining Corp. on April 1 took the next step in its arbitration case against the Salvadoran government for halting the company’s work on the El Dorado gold mining project.

The company’s US subsidiary, PacRim Cayman LLC, filed a statement of claim, also called a memorial, in which it outlined the company’s claims against the government, which it says breached the Salvadoran Investment Law when it refused to provided Pacific Rim with the necessary mining licenses.

A three-member tribunal at the World Bank’s International Center for Settlement of Investment Disputes in Washington, DC will determine if in fact El Salvador violated the law, and if so, what monetary compensation it owes to PacRim.

"The filing of the memorial represents a significant milestone in the arbitration. We are very confident in the merits of our case and our ability to receive fair-value for our expropriated assets,” Pacific Rim President & CEO Tom Shrake  said in a company statement.

He said that because of this behavior not just towards PacRim but also to other potential investors, El Salvador “is now the single worst jurisdiction in all of Latin America in attracting foreign investment, and the slowest growing economy in Central America for the eighth consecutive year.”

“We continue to reach out to the government of El Salvador to end this dispute to allow our Salvadoran employees to get back to work,” Shrake concluded.

A valuation, released on March 28 by an independent expert, estimated PacRim’s desired compensation at $315 million USD. 

PacRim says it supported the memorial with detailed statements from expert witnesses, including economic geologists, environmental scientists, international mining lawyers, and mine financiers.

One of the claims it makes is that the El Dorado Mine was designed with new precedents in environmental protection that exceeded even US and Canadian standards.

“Preservation of water quality and quantity is a key component of the industry-leading El Dorado mine design,” the company said.

“Water for ore processing is to be collected in a reservoir in the subtropical ecosystem and not drawn from local water supplies. The water used by the operation will be extensively recycled and any water discharged from the reservoir will be processed by a water treatment plant. Water leaving the reservoir will be significantly cleaner than it was when it arrived on site and will provide a clean water source for local villages,” it said.

If the mine had been allowed to progress as originally expected eight years ago, when it was first submitted to the Salvadoran government, it would currently be operating, according to the mining company.

PacRim would also have been the single largest taxpayer in the entire country.

The company began legal proceedings in 2009. At that time, the mine was facing major opposition from environmental organizations backed by the Catholic Church.

The Salvadoran government has been under increasing pressure to ban all mining because of the common belief that the country's small size and dense population would multiply the effects of pollution.